California wine grape industry gaining strength

California’s total shipments to the U.S. market in 2011 were 6 percent greater than the year before.
California sold more packaged exports than ever thanks to a weak U.S. dollar and limited foreign supplies. But there were no incentives to move wine out of California in bulk.
Four wineries — E&J Gallo, the Wine Group, Trinchero and Delicato — accounted for 75 percent of all the growth in the market last year.

Dennis Pollock | May 22, 2012

Some number crunching brought good news to those who attended a round of grape grower tailgate meetings in California’s San Joaquin Valley, including word that the state’s total shipments to the U.S. market in 2011 were 6 percent greater than the year before.

That’s the highest it has been year-to-year since 2003, said Jeff Bitter, vice president for operations with Fresno-based Allied Grape Growers.

Those at the meetings also heard about ways to monitor use of nutrients that include nitrogen, which has become a focus for regulators because of nitrates in the state’s water supply. They were also reminded too much nitrogen can harm their crop.

Bitter said year-to-year increases have been in the 1 percent to 3 percent range. And data extrapolated from a Gromberg-Fredrikson report show the wine grape industry could be climbing out of the 2009-2010 recession.

“The real growth has come in shipments of bottles in the $3 to $7 [per bottle] and the $7 to $14 category,” Bitter said, pointing to increases of 9.2 percent and 8.3 percent respectively. Consumers remain price conscious, he said, adding that higher end wineries are providing a lot of new wine offerings in the $7-$14 range.

Wine at above $14 a bottle increased at 8.2 percent as well, but that was on a base of 25 million cases, compared to about 127 million cases for the lower cost wines.

Chardonnay shipments were up just 3.2 percent, but that amounted to a whopping 55 million cases.

Bitter said cabernet sauvignon rose at 6.2 percent and a challenge in that area will be supplying the market: “Can we get it on the shelf in the same quantity and at the same price?”

California sold more packaged exports than ever, Bitter said, thanks to a weak U.S. dollar and limited foreign supplies. But there were no incentives to move wine out of California in bulk.

On the other side of the coin, bulk imports were up by more than a quarter because of a need to supplement supply, Bitter said. But packaged imports were low.

And four wineries — E&J Gallo, the Wine Group, Trinchero and Delicato — accounted for 75 percent of all the growth in the market last year.

“The big boys are big and are getting bigger,” Bitter said.

E&J Gallo alone accounted for 28.6 percent of California wine shipments, with a 9 percent jump for the year, considered to be huge growth given its large base. Gallo has stepped up contracts for grapes in the state and expanded its capacity to handle them.

Gary Agajanian with Agajanian Vineyards, a grape and wine buyer in Madera, said “a few wineries dominate in the Central Valley and we need those guys.” But he also champions diversity.

“Now is the time to lock in prices,” Agajanian said. “Don’t take one year’s hot price. Think long term.”

Agajanian said many wines were discounted into the market last year as wineries “moved out a lot of inventory.”

Agajanian and Bitter were among speakers at the tailgate session at Bapu Farms in Madera. Other programs were presented in Visalia and Manteca.

Nitrates, farm labor

It’s best, he said, to provide smaller doses of nutrients multiple times, likening that approach to people who prefer to eat periodically, not one meal a month. He also emphasized the importance of keeping nutrients within the root zone.

“As fertilizer prices increase, we want to only apply what we need,” he said. That may mean a need to do more soil and plant tissue testing.

He pointed out that excessive applications of nitrogen can have adverse effects, including increased vegetative growth, reduced fruit set and reduction in sugar content.

And potassium demand could exceed demand for nitrogen, particularly in sandy soils.

Larkin recommends testing of the plant petiole as well as leaf blade: “The petiole is like the highway for the plant, and the leaf blade is the parking lot.” The petiole, he said, is the “transport mechanism” and the blade plays a role in storage.

He said there are five stages at which plant sampling can be done: at pre-bloom, bloom time, berry set verasion and post harvest. He favors sampling at bloom, berry set and verasion.

Sandoval said he believes a proposed farmworker safety bill, AB 2346, is flawed and could have unintended consequences. Among its provisions, he said, is a requirement for workers to be taken to a medical doctor within five minutes if they complain of a headache or other symptoms of heat illness rather than being given first aid.

His fear: “They will have to stop working; they will stop complaining and die instead.”

Sandoval said he does favor proposed legislation, AB 1675, that would bring greater liability to growers who contract with unlicensed farm labor contractors.

He also distributed a checklist for growers to follow when entering into labor contracts, including recommendations on proper transportation of workers.

Sandoval pointed to a Supreme Court decision that holds that employers are not required to ensure employees do no work during meal periods. He said that is an important ruling for agriculture given that some piece workers may wish to waive the right to meal breaks.

Pete Mendez and Andrea Alexander, representatives of Pacific Gas and Electric, spoke on the California Solar Initiative and incentives offered for projects. The project must have a minimum size of 1 kilowatt and a maximum of 5 megawatts. Energy audits must be done before applying for incentives.

Areas in which collectors are placed should face south, west or east, and the best alignment is south or southwest. If the collectors are roof mounted, care should be taken to assure that there is “significant roof life left,” Mendez said.

He said projects should not be sized to exceed electrical use requirements.

Financing methods include cash, loan, lease or payment only for energy produced by the system.

Patty Oliver, United Valley Insurance, said the picture for health care reform could change greatly in the months ahead as an election and court ruling loom.

She said among positive outcomes of the reform is the fact that a child can remain insured to age 26 on their parents plan. She recommends keeping children on plans as a dependent rather than insuring them as an employee if they are in a family business.

Oliver said agricultural employers do not have to offer insurance to seasonal employees and that that it may cost less to pay the annual fine for not offering insurance than it would to pay for the insurance.